Hi John:
I am confused by the description of "xbox running MSFS now on my desktop".
"XBOX" is a MS hardware device ("console") consisting of a semi-proprietary stand-alone computer in a small case.
We do all have access to MSFS via a Windows "XBOX" core software layer even on "normal" desktop or laptop computers.
However, IIUC, that "Microsoft Gaming Services" executable is a single file:
C:\Windows\System32\
XGameHelper.exe
We otherwise have nothing to do with XBOX as a device.
But Microsoft tends to popularize the XBOX 'brand' as the name for the Gaming division of Microsoft Store online.
I do not personally use Steam, but IIUC, it is convenient to some users who want to have an online repository for downloads and updates that can be streamed rather than searching for DVDs or other offline installers that require separate activation.
L-M Prepar3D is somewhat like Steam and MSFS via MS-Store in that one installs/updates via a online source with less hassles.
But earlier versions of Steam had some challenges, especially with FSX_SE.
IMHO, there is no need to involve Steam with my computer, as MS Store handles sale, installation, updates to MSFS quite well.
BTW: The only "CoPilot" I would trust is one flying with me via "Shared Cockpit" in FS Multi-Player mode.
GaryGB